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Safe to Invest Singapore Property?

invest singapore property

In the course of my work, I am often asked is it safe to invest in Singapore property by my local and international buyers. I wish to shed light here by explaining the property transaction legal framework to the best of my knowledge.

Legal Protection for Home Buyers

In Singapore, developers can only sell housing units in a residential project before its construction after obtaining the Building Plan Approval from the Commissioner of Building Control, and Housing Developer’s Sale Licence issued by the Controller of Housing. This safeguard ensures that buyers will be purchasing properties that are developed by licensed housing developers.

Licensed housing developers in Singapore are required to use the standard ‘Option to Purchase’ and ‘Sale & Purchase Agreement’ forms prescribed under the Housing Developers’ Rules for the sale of uncompleted housing units. The Sale & Purchase Agreement specifies the payment schedule in line with the construction progress. As the construction period is about three to four years (depending on the size of the project), buyers enjoy progressive disbursement of their mortgage loan. They know right from the start how much they need to pay at various stages of construction of the housing project. This helps buyers plan their financial outlay.

After the Sale & Purchase Agreement is signed, a caveat is lodged with the Registrar of Titles by the buyer’s lawyer to protect the buyer’s interest.

Licensed housing developers are required to open and maintain a Project Account for the housing project with a bank or financial institution. The developers must deposit into this account:

  1. All monies paid by a buyer (including booking fee) towards the purchase of a unit up to the issue of Temporary Occupation Permit (TOP) for the unit;
  2. all loans obtained for the construction of the housing project.

Monies in this Account can only be withdrawn by the licensed developer for purposes related to that particular housing project. This gives buyers a greater sense of assurance that the project will be completed.

Buyers can move into their new homes after the TOP is issued by the Commissioner of Building Control to the developer. The developer is obliged to rectify any defects in the housing project within a 12-month defects liability period from the date of handling over the unit to the buyer. Thus, buyers have a legal recourse if defects are found within the 12-month period.

In Singapore, the developer will manage the property until the Management Corporation is formed, usually within two to three years from the date of TOP (depending on the size of the project). Thereafter, the Management Corporation will take over the management and maintenance of the common areas and amenities in the housing development.

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